Friday, 27 October 2017 marks the tabling of the 2018 National Budget by the Honourable Prime Minister, YAB Dato Sri Najib Razak. With the theme Prospering an Inclusive Economy, Balancing Between Worldly and Hereafter, For the Wellbeing of Rakyat, Towards the TN50 Aspiration, this represents yet another ambitious and well rounded Budget aimed at providing for all Malaysians regardless of colour and creed. The National Budget of RM280.25 billion is carefully crafted to care for the SME, tourism, agriculture, logistics and financial sectors whilst not neglecting the Rakyat via the 2050 National Transformation (TN50) programme, with emphasis on welfare, education and sports. Malaysia is expecting a GDP growth of 5.2 to 5.7% in 2017. It further expects GDP growth of between 5.0 to 5.5% in 2018. This is an ambitious goal by anyone s standards, especially when the global average is only at 3.7%. Impressively, the Budget deficit is expected to reduce to 2.8% in 2018 aided by significant increases in revenue, particularly from the Direct Tax sector. On a more serious note, the Honourable Prime Minister also reaffirmed that Malaysia is committed to economic information sharing introduced by the OECD in connection with the implementation of the BEPS Action Plans as well as the Automatic Exchange of Information next year. This will no doubt lead to increased compliance obligations for taxpayers. The following pages set out a quick snapshot of the key changes that have been announced in this year s Budget. Should you have any queries relating to this snapshot or any other tax matters, please contact your KPMG consultants or send us an email at info@kpmg.com.my Happy reading! The announcement of 2018 as the Women Empowerment Year is also extremely welcomed and I am proud to say that KPMG fully acknowledges women as significant pillars of our community. In fact, KPMG in Malaysia has been working with the Women s Aid Organisation for a number of years. It is also extremely pleasing to note that the Government has heeded the cries of the M40 Group who has been bearing the brunt of the rising cost of living. The reduction in income tax rates, which increases disposable income by up to RM1,000, is timely and will no doubt be celebrated by many. Tai Lai Kok Executive Director Head of Tax KPMG Tax Services Sdn Bhd
Streamlining of tax incentives in line with Forum on Harmful Tax Practices (FHTP) criteria before 1 January 2019 Implementation of Automatic Exchange of Information commencing September 2018 Earning Stripping Rules (ESR) to replace Thin Capitalisation Rules from 1 January 2019. Interest deduction on loans between Review of personal tax related companies may be limited reliefs for spouse, parents, to a percentage of earnings children, tertiary education and employee SOCSO contributions Capital allowance over 4 years for information and communication technology equipment and software, including expenditure incurred for development of software Extension of tax incentives for 4 and 5 star hotels, tour operators and principal hub Accelerated capital allowance (ACA) and automation equipment allowance (AEA) for the adoption of technology drivers Extension of ACA and AEA for automation in labour intensive industries in the manufacturing sector Extension of tax incentive for expansion, modernization or refurbishment of private healthcare services (PHS) Increase in tax exemption for export of PHS 2017 KPMG Tax Services Sdn. Bhd., a company incorporated under Malaysian law and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. All rights reserved. Printed in Malaysia.
Tax exemptions for recipient of Green Sustainable and Responsible Investments (SRI) sukuk grant and fund managers of SRI funds Tax incentives for managing Venture Capital Company (VCC) funds and investments into VCC funds, extension of tax incentive for angel investors Stamp duty exemption on contract notes for trading of Exchange Traded Funds and Structured Warrants GST relief on construction of school buildings and places of worship financed through public donations, importation of big ticket items by aviation, shipping and oil and gas industries GST relief on importation of goods under lease agreements from Designated Areas for the oil and gas industry and handling services rendered to cruise ship operators Management and maintenance services for residential buildings provided by developers to be treated as exempt supply for GST purposes 2% reduction in personal income tax rates for individuals at chargeable income bands between RM20,001 to RM70,000 2017 KPMG Tax Services Sdn. Bhd., a company incorporated under Malaysian law and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. All rights reserved. Printed in Malaysia.